In 2021, an error is discovered in the financial statements from a transaction that occurred in the previous year (2020). The error caused expenses to be understated. What is the proper way to correct the error? Through a prior period adjustment to the ending balance of retained earnings on the balance sheet Through a prior period adjustinent to expenses on the income statement. Through a prior period adjustment to the beginning balance of retained earnings on the retained earnings statement No correction is necessary as the error occurred in a previous year